Form 8-K APPLE INC For: Nov 01
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
November 1, 2018
Date of Report (Date of earliest event reported)
Apple Inc.
(Exact name of Registrant as specified in its charter)
California | 001-36743 | 94-2404110 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) | ||
One Apple Park Way
Cupertino, California 95014
(Address of principal executive offices) (Zip Code)
(408) 996-1010
(Registrant’s telephone number, including area code)
Not applicable
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions:
☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the Registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
On November 1, 2018, Apple Inc. (“Apple”) issued a press release regarding Apple’s financial results for its fourth fiscal quarter ended September 29, 2018 and a related data sheet. A copy of Apple’s press release is attached hereto as Exhibit 99.1 and a copy of the related data sheet is attached hereto as Exhibit 99.2.
The information contained in this Current Report shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
Item 9.01 Financial Statements and Exhibits.
(d) | Exhibits. |
Exhibit Number | Exhibit Description | |
99.1 | ||
99.2 | ||
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: | November 1, 2018 | Apple Inc. | |||
By: | /s/ Luca Maestri | ||||
Luca Maestri | |||||
Senior Vice President, Chief Financial Officer | |||||
Exhibit 99.1
Apple Reports Fourth Quarter Results
Revenue Up 20 Percent and EPS Up 41 Percent to New September Quarter Records
Services Revenue of $10 Billion Reaches New All-Time High
CUPERTINO, California — November 1, 2018 — Apple® today announced financial results for its fiscal 2018 fourth quarter ended September 29, 2018. The Company posted quarterly revenue of $62.9 billion, an increase of 20 percent from the year-ago quarter, and quarterly earnings per diluted share of $2.91, up 41 percent. International sales accounted for 61 percent of the quarter’s revenue.
Services revenue reached an all-time high of $10 billion. Excluding a one-time favorable adjustment of $640 million recognized in the fourth quarter of fiscal 2017, Services revenue grew from $7.9 billion in the fourth quarter of fiscal 2017 to $10 billion in the fourth quarter of fiscal 2018, an increase of 27 percent.
“We’re thrilled to report another record-breaking quarter that caps a tremendous fiscal 2018, the year in which we shipped our 2 billionth iOS device, celebrated the 10th anniversary of the App Store and achieved the strongest revenue and earnings in Apple’s history,” said Tim Cook, Apple’s CEO. “Over the past two months, we’ve delivered huge advancements for our customers through new versions of iPhone, Apple Watch, iPad and Mac as well as our four operating systems, and we enter the holiday season with our strongest lineup of products and services ever.”
“We concluded a record year with our best September quarter ever, growing double digits in every geographic segment. We set September quarter revenue records for iPhone and Wearables and all-time quarterly records for Services and Mac,” said Luca Maestri, Apple’s CFO. “We generated $19.5 billion in operating cash flow and returned over $23 billion to shareholders in dividends and share repurchases in the September quarter, bringing total capital returned in fiscal 2018 to almost $90 billion.”
Apple is providing the following guidance for its fiscal 2019 first quarter:
• | revenue between $89 billion and $93 billion |
• | gross margin between 38 percent and 38.5 percent |
• | operating expenses between $8.7 billion and $8.8 billion |
• | other income/(expense) of $300 million |
• | tax rate of approximately 16.5 percent before discrete items |
Apple’s board of directors has declared a cash dividend of $0.73 per share of the Company’s common stock. The dividend is payable on November 15, 2018 to shareholders of record as of the close of business on November 12, 2018.
Apple will provide live streaming of its Q4 2018 financial results conference call beginning at 2:00 p.m. PDT on November 1, 2018 at www.apple.com/investor/earnings-call/. This webcast will also be available for replay for approximately two weeks thereafter.
Apple periodically provides information for investors on its corporate website, apple.com, and its investors relations website, investor.apple.com. This includes press releases and other information about financial performance, reports filed or furnished with the SEC, information on corporate governance and details related to its annual meeting of shareholders.
This press release contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include without limitation those about the Company’s estimated revenue, gross margin, operating expenses, other income/(expense), tax rate, and plans for return of capital. These statements involve risks and uncertainties, and actual results may differ. Risks and uncertainties include without limitation: the effect of global and regional economic conditions on the Company's business, including effects on purchasing decisions by consumers and businesses; the ability of the Company to compete in markets that are highly competitive and subject to rapid technological change; the ability of the Company to manage frequent introductions and transitions of products and services, including delivering to the marketplace, and stimulating customer demand for, new products, services and technological innovations on a timely basis; the effect that shifts in the mix of products and services and in the geographic, currency or channel mix, component cost increases, price competition, or the introduction of new products, including new products with higher cost structures, could have on the Company’s gross margin; the dependency of the Company on the performance of distributors of the Company's products, including cellular network carriers and other resellers; the inventory and other asset risks associated with the Company’s need to order, or commit to order, product components in advance of customer orders; the continued availability on acceptable terms, or at all, of certain components, services and new technologies essential to the Company's business, including components and technologies that may only be available from single or limited sources; the dependency of the Company on manufacturing and logistics services provided by third parties, many of which are located outside of the US and which may affect the quality, quantity or cost of products manufactured or services rendered to the Company; the effect of product and services design and manufacturing defects on the Company’s financial performance and reputation; the dependency of the Company on third-party intellectual property and digital content, which may not be available to the Company on commercially reasonable terms or at all; the dependency of the Company on support from third-party software developers to develop and maintain software applications and services for the Company’s products; the impact of unfavorable legal proceedings, such as a potential finding that the Company has infringed on the intellectual property rights of others; the impact of changes to laws and regulations that affect the Company’s activities, including the Company’s ability to offer products or services to customers in different regions; the ability of the Company to manage risks associated with its international activities, including complying with laws and regulations affecting the Company’s international operations; the ability of the Company to manage risks associated with the Company’s retail stores; the ability of the Company to manage risks associated with the Company’s investments in new business strategies and acquisitions; the impact on the Company's business and reputation from information technology system failures, network disruptions or losses or unauthorized access to, or release of, confidential information; the ability of the Company to comply with laws and regulations regarding data protection; the continued service and availability of key executives and employees; political events, international trade disputes, war, terrorism, natural disasters, public health issues, and other business interruptions that could disrupt supply or delivery of, or demand for, the Company’s products; financial risks, including risks relating to currency fluctuations, credit risks and fluctuations in the market value of the Company’s investment portfolio; and changes in tax rates and exposure to additional tax liabilities. More information on these risks and other potential factors that could affect the Company’s financial results is included in the Company’s filings with the SEC, including in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of the Company’s most recently filed periodic reports on Form 10-K and Form 10-Q and subsequent filings. The Company assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates.
Apple revolutionized personal technology with the introduction of the Macintosh in 1984. Today, Apple leads the world in innovation with iPhone, iPad, Mac, Apple Watch and Apple TV. Apple’s four software platforms — iOS, macOS, watchOS and tvOS — provide seamless experiences across all Apple devices and empower people with breakthrough services including the App Store, Apple Music, Apple Pay and iCloud. Apple’s more than 100,000 employees are dedicated to making the best products on earth, and to leaving the world better than we found it.
Press Contact:
Kristin Huguet
Apple
(408) 974-2414
Investor Relations Contacts:
Nancy Paxton
Apple
(408) 974-5420
Matt Blake
Apple
(408) 974-7406
NOTE TO EDITORS: For additional information visit Apple Newsroom (www.apple.com/newsroom), or call Apple’s Media Helpline at (408) 974-2042.
© 2018 Apple Inc. All rights reserved. Apple and the Apple logo are trademarks of Apple Inc. Other company and product names may be trademarks of their respective owners.
Apple Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In millions, except number of shares which are reflected in thousands and per share amounts)
Three Months Ended | Twelve Months Ended | ||||||||||||||
September 29, 2018 | September 30, 2017 | September 29, 2018 | September 30, 2017 | ||||||||||||
Net sales | $ | 62,900 | $ | 52,579 | $ | 265,595 | $ | 229,234 | |||||||
Cost of sales (1) | 38,816 | 32,648 | 163,756 | 141,048 | |||||||||||
Gross margin | 24,084 | 19,931 | 101,839 | 88,186 | |||||||||||
Operating expenses: | |||||||||||||||
Research and development (1) | 3,750 | 2,997 | 14,236 | 11,581 | |||||||||||
Selling, general and administrative (1) | 4,216 | 3,814 | 16,705 | 15,261 | |||||||||||
Total operating expenses | 7,966 | 6,811 | 30,941 | 26,842 | |||||||||||
Operating income | 16,118 | 13,120 | 70,898 | 61,344 | |||||||||||
Other income/(expense), net | 303 | 797 | 2,005 | 2,745 | |||||||||||
Income before provision for income taxes | 16,421 | 13,917 | 72,903 | 64,089 | |||||||||||
Provision for income taxes | 2,296 | 3,203 | 13,372 | 15,738 | |||||||||||
Net income | $ | 14,125 | $ | 10,714 | $ | 59,531 | $ | 48,351 | |||||||
Earnings per share: | |||||||||||||||
Basic | $ | 2.94 | $ | 2.08 | $ | 12.01 | $ | 9.27 | |||||||
Diluted | $ | 2.91 | $ | 2.07 | $ | 11.91 | $ | 9.21 | |||||||
Shares used in computing earnings per share: | |||||||||||||||
Basic | 4,801,589 | 5,149,428 | 4,955,377 | 5,217,242 | |||||||||||
Diluted | 4,847,547 | 5,183,585 | 5,000,109 | 5,251,692 | |||||||||||
Cash dividends declared per share | $ | 0.73 | $ | 0.63 | $ | 2.72 | $ | 2.40 | |||||||
(1) Includes share-based compensation expense as follows: | |||||||||||||||
Cost of sales | $ | 251 | $ | 215 | $ | 1,010 | $ | 877 | |||||||
Research and development | $ | 681 | $ | 569 | $ | 2,668 | $ | 2,299 | |||||||
Selling, general and administrative | $ | 413 | $ | 390 | $ | 1,662 | $ | 1,664 | |||||||
Apple Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(In millions, except number of shares which are reflected in thousands and par value)
September 29, 2018 | September 30, 2017 | ||||||
ASSETS: | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 25,913 | $ | 20,289 | |||
Marketable securities | 40,388 | 53,892 | |||||
Accounts receivable, net | 23,186 | 17,874 | |||||
Inventories | 3,956 | 4,855 | |||||
Vendor non-trade receivables | 25,809 | 17,799 | |||||
Other current assets | 12,087 | 13,936 | |||||
Total current assets | 131,339 | 128,645 | |||||
Non-current assets: | |||||||
Marketable securities | 170,799 | 194,714 | |||||
Property, plant and equipment, net | 41,304 | 33,783 | |||||
Other non-current assets | 22,283 | 18,177 | |||||
Total non-current assets | 234,386 | 246,674 | |||||
Total assets | $ | 365,725 | $ | 375,319 | |||
LIABILITIES AND SHAREHOLDERS’ EQUITY: | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 55,888 | $ | 44,242 | |||
Other current liabilities | 32,687 | 30,551 | |||||
Deferred revenue | 7,543 | 7,548 | |||||
Commercial paper | 11,964 | 11,977 | |||||
Term debt | 8,784 | 6,496 | |||||
Total current liabilities | 116,866 | 100,814 | |||||
Non-current liabilities: | |||||||
Deferred revenue | 2,797 | 2,836 | |||||
Term debt | 93,735 | 97,207 | |||||
Other non-current liabilities | 45,180 | 40,415 | |||||
Total non-current liabilities | 141,712 | 140,458 | |||||
Total liabilities | 258,578 | 241,272 | |||||
Commitments and contingencies | |||||||
Shareholders’ equity: | |||||||
Common stock and additional paid-in capital, $0.00001 par value: 12,600,000 shares authorized; 4,754,986 and 5,126,201 shares issued and outstanding, respectively | 40,201 | 35,867 | |||||
Retained earnings | 70,400 | 98,330 | |||||
Accumulated other comprehensive income/(loss) | (3,454 | ) | (150 | ) | |||
Total shareholders’ equity | 107,147 | 134,047 | |||||
Total liabilities and shareholders’ equity | $ | 365,725 | $ | 375,319 | |||
Apple Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In millions)
Twelve Months Ended | |||||||
September 29, 2018 | September 30, 2017 | ||||||
Cash and cash equivalents, beginning of the period | $ | 20,289 | $ | 20,484 | |||
Operating activities: | |||||||
Net income | 59,531 | 48,351 | |||||
Adjustments to reconcile net income to cash generated by operating activities: | |||||||
Depreciation and amortization | 10,903 | 10,157 | |||||
Share-based compensation expense | 5,340 | 4,840 | |||||
Deferred income tax expense/(benefit) | (32,590 | ) | 5,966 | ||||
Other | (444 | ) | (166 | ) | |||
Changes in operating assets and liabilities: | |||||||
Accounts receivable, net | (5,322 | ) | (2,093 | ) | |||
Inventories | 828 | (2,723 | ) | ||||
Vendor non-trade receivables | (8,010 | ) | (4,254 | ) | |||
Other current and non-current assets | (423 | ) | (5,318 | ) | |||
Accounts payable | 9,175 | 8,966 | |||||
Deferred revenue | (44 | ) | (626 | ) | |||
Other current and non-current liabilities | 38,490 | 1,125 | |||||
Cash generated by operating activities | 77,434 | 64,225 | |||||
Investing activities: | |||||||
Purchases of marketable securities | (71,356 | ) | (159,486 | ) | |||
Proceeds from maturities of marketable securities | 55,881 | 31,775 | |||||
Proceeds from sales of marketable securities | 47,838 | 94,564 | |||||
Payments for acquisition of property, plant and equipment | (13,313 | ) | (12,451 | ) | |||
Payments made in connection with business acquisitions, net | (721 | ) | (329 | ) | |||
Purchases of non-marketable securities | (1,871 | ) | (521 | ) | |||
Proceeds from non-marketable securities | 353 | 126 | |||||
Other | (745 | ) | (124 | ) | |||
Cash generated by/(used in) investing activities | 16,066 | (46,446 | ) | ||||
Financing activities: | |||||||
Proceeds from issuance of common stock | 669 | 555 | |||||
Payments for taxes related to net share settlement of equity awards | (2,527 | ) | (1,874 | ) | |||
Payments for dividends and dividend equivalents | (13,712 | ) | (12,769 | ) | |||
Repurchases of common stock | (72,738 | ) | (32,900 | ) | |||
Proceeds from issuance of term debt, net | 6,969 | 28,662 | |||||
Repayments of term debt | (6,500 | ) | (3,500 | ) | |||
Change in commercial paper, net | (37 | ) | 3,852 | ||||
Cash used in financing activities | (87,876 | ) | (17,974 | ) | |||
Increase/(Decrease) in cash and cash equivalents | 5,624 | (195 | ) | ||||
Cash and cash equivalents, end of the period | $ | 25,913 | $ | 20,289 | |||
Supplemental cash flow disclosure: | |||||||
Cash paid for income taxes, net | $ | 10,417 | $ | 11,591 | |||
Cash paid for interest | $ | 3,022 | $ | 2,092 | |||
Exhibit 99.2 | |||||||||||||||||||||||||||||||||
Apple Inc. | |||||||||||||||||||||||||||||||||
Q4 2018 Unaudited Summary Data | |||||||||||||||||||||||||||||||||
(Units in thousands, Revenue in millions) | |||||||||||||||||||||||||||||||||
Q4 2018 | Q3 2018 | Q4 2017 | Sequential Change | Year/Year Change | |||||||||||||||||||||||||||||
Revenue | Revenue | Revenue | Revenue | Revenue | |||||||||||||||||||||||||||||
Reportable Segments | |||||||||||||||||||||||||||||||||
Americas | $ | 27,517 | $ | 24,542 | $ | 23,099 | 12 | % | 19 | % | |||||||||||||||||||||||
Europe | 15,382 | 12,138 | 13,009 | 27 | % | 18 | % | ||||||||||||||||||||||||||
Greater China | 11,411 | 9,551 | 9,801 | 19 | % | 16 | % | ||||||||||||||||||||||||||
Japan | 5,161 | 3,867 | 3,858 | 33 | % | 34 | % | ||||||||||||||||||||||||||
Rest of Asia Pacific | 3,429 | 3,167 | 2,812 | 8 | % | 22 | % | ||||||||||||||||||||||||||
Total Apple | $ | 62,900 | $ | 53,265 | $ | 52,579 | 18 | % | 20 | % | |||||||||||||||||||||||
Q4 2018 | Q3 2018 | Q4 2017 | Sequential Change | Year/Year Change | |||||||||||||||||||||||||||||
Units | Revenue | Units | Revenue | Units | Revenue | Units | Revenue | Units | Revenue | ||||||||||||||||||||||||
Product Summary | |||||||||||||||||||||||||||||||||
iPhone (1) | 46,889 | $ | 37,185 | 41,300 | $ | 29,906 | 46,677 | $ | 28,846 | 14 | % | 24 | % | 0 | % | 29 | % | ||||||||||||||||
iPad (1) | 9,699 | 4,089 | 11,553 | 4,741 | 10,326 | 4,831 | -16 | % | -14 | % | -6 | % | -15 | % | |||||||||||||||||||
Mac (1) | 5,299 | 7,411 | 3,720 | 5,330 | 5,386 | 7,170 | 42 | % | 39 | % | -2 | % | 3 | % | |||||||||||||||||||
Services (2) | 9,981 | 9,548 | 8,501 | 5 | % | 17 | % | ||||||||||||||||||||||||||
Other Products (1)(3) | 4,234 | 3,740 | 3,231 | 13 | % | 31 | % | ||||||||||||||||||||||||||
Total Apple | $ | 62,900 | $ | 53,265 | $ | 52,579 | 18 | % | 20 | % | |||||||||||||||||||||||
(1) | Includes deferrals and amortization of related software upgrade rights and non-software services. | ||||||||||||||||||||||||||||||||
(2) | Includes revenue from Digital Content and Services, AppleCare, Apple Pay, licensing and other services. Services net sales in the third quarter of 2018 included a favorable one-time item of $236 million in connection with the final resolution of various lawsuits. Services net sales in the fourth quarter of 2017 included a favorable one-time adjustment of $640 million due to a change in estimate based on the availability of additional supporting information. | ||||||||||||||||||||||||||||||||
(3) | Includes sales of AirPods, Apple TV, Apple Watch, Beats products, HomePod, iPod touch and other Apple-branded and third-party accessories. | ||||||||||||||||||||||||||||||||